Walter Energy to develop new coal mine in Tuscaloosa County

Tuesday

May 1, 2012 at 10:52 AM

Governor Robert Bentley on Tuesday announced that Walter Energy, Inc., will soon begin development on a new project that will create more than 500 additional jobs in four Alabama counties. The announcement follows the recent approval of incentives that were designed to create new economic opportunities for the people of Alabama.

By Patrick Rupinski and Dana BeyerleStaff Writers

Walter Energy Inc. confirmed plans Tuesday to develop a new underground coal mine in Tuscaloosa County.The Hoover-based energy company that has operations in three countries said it will spend $1.2 billion to develop the mine and support facilities, making it one of the biggest single investments in the state in recent years.The project will take five to six years to construct and is expected to create 530 high-paying jobs when it become fully operational. Walter Energy officials estimated the average annual pay and fringe benefits will be $120,000 per employee.About 500 of the new jobs will be in Tuscaloosa County, but the company said it will be several years before it starts filling the positions.“These jobs are going to be around for 30 to 40 years,” said Walter Scheller, Walter Energy's CEO, who formally announced the project with Gov. Robert Bentley in Montgomery. Scheller said the underground coal reserves were identified by the hundreds of oil and gas wells above ground.“It will be a big mine,” he said. “This will be an important project for our company and the state of Alabama.”The new mine will cover an area of about 20,400 acres, with estimated reserves of 120 million tons of high-value metallurgical coal.But before the coal can be mined, major construction in four western Alabama counties will occur over the next few years. That could produce 3,000 additional jobs for the construction industry during the building phase, said Dennis Hall, a Walter Energy spokesman.The mine entrance and surface processing facilities will be built near Brandon School Road and Alabama Highway 69 in northern Tuscaloosa County near the Fayette and Walker county lines. The location is about 10 to 12 miles south of the town of Berry. The project also will include a new railroad spur line into Fayette County, a new barge-loading facility on the Black Warrior River in Walker County and a new coal terminal at the Port of Mobile. A 14-mile conveyor belt will be built to carry the coal to the barge-loading facility. The rail spur line will involve laying about eight miles of track to link with Norfolk Southern line in Fayette County, Hall said.Walter Energy, which operates other coal mines in West Alabama, ships its metallurgical coal by barge and rail to Mobile.The company has acquired the 35-acre U.S. Steel coal terminal site at the Port of Mobile. The terminal that was there dated to the 1950s and has been torn down, Hall said, and a new, modern coal terminal will be as part of the project.The terminal, rail line and barge facilities will be built in tandem with the mine so all will be put into operation about the same time, he said.The mine, which will operate as Blue Creek Energy, is expected to annually produce about 3 million tons of metallurgical coal, a low-sulfur coal that is highly valued in the steel-making industry. Most of the coal is expected to be exported through the Port of Mobile to Latin America, with steel plants in Brazil and Argentina being two of the largest customers. Some coal also will be exported to Europe.Walter Energy has several underground mines in the Tuscaloosa area. Its Jim Walter Resources unit has two mines near Brookwood, No. 4 and No. 7. The No. 7 mine has two entrances — No. 7 West in Tuscaloosa County and No. 7 East in Jefferson County. Walter Energy also owns North River Mine in southern Fayette County. That mine is about two to three miles from the planned mine. The North River Mine was acquired from Chevron Corp. last May along with mineral leases that will form a core area for the new mine.Walter Energy said it was considering opening a new mine when it released its third quarter results last fall, and The Tuscaloosa New first reported in December that company and government officials were in discussions for the project, which was described then as rivaling the Mercedes auto assembly plant in Vance for its economic impact.A stumbling block to the project was the state's tax incentives for new and expanding industries.State law allowed manufacturers to get some property and sales tax breaks for new plants and expansions. Those incentives, however, did not cover the mining industry.With the Walter Energy project in discussion, the Legislature passed a new law, known as House Bill 154, this year that allows counties to give some tax breaks to the coal mining industry.Bentley signed the law in March, and Walter Energy's directors approved the new mine shortly thereafter.Scheller noted that the coal-mining industry is capital intensive and that the company had to decide whether to use its funds to open a new mine in Alabama or expand its existing mines.The incentives tipped the balance toward the Tuscaloosa project, he said.Dara Longgrear, executive director of the Tuscaloosa County Industrial Development Authority, said he expects Walter Energy will request tax abatements next month for the Tuscaloosa County portion of the project.Similar requests could be made in the other three counties, which also will benefit from the mine.The incentives would abate some sales and use taxes that would be incurred during construction and increased property taxes that would be assessed on the improved property over a limited number of years. The portion of those taxes going to school taxes cannot be abated.Walter Energy also operates some surface coal mines in Alabama and has coal mines in West Virginia, western Canada and Wales. It also has natural gas well operations in Tuscaloosa County, a coking plant in Birmingham and other coal-related businesses.The company has about 4,400 employees with more than 2,100 workers in Alabama.

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